equity trading. i'm francine lacqua in london. friday's mega jobs report sparks worries of ongoing fed rate hikes. the u.s. saw a gain of or than -- more than 500,000, boosting the dollar and treasury yields. the u.s. retrieves what it believes to be spy equipment from a down to chinese balloon. beijing says it serves the right to respond as tensions flare. we speak to the chief executives of renault and nissan about their partnership changes. the market open about 15 seconds away. the focus firmly on what the repricing of fed rate hikes can do. because of that, unexpectedly strong u.s. jobs report. this is raising the prospect of more rate hikes from the fed, and we have to figure out the fallout from this u.s.-china geopolitical tension, how much

that is weighing on market sentiment given on thursday we thought antony blinken would travel to china to meet his counterpart. we are watching yen, huge speculation about who could take over from governor kuroda. the japanese government refuted that report, investors assuming the greater likelihood of ultra loose monetary policy enduring. and then we look at commodities. brent crude gaining a touch, .7% higher. and natural gas one of the big stories that we had this week was yesterday, the ban on diesel coming in from russia. cross asset, we not only look at treasuries but everything in between in terms of u.s. dollar, the u.s. 10-year yield 3.5449, and dollar 1236.

after the jobs print, analysts are split on the data. for more, valerie tytel joins us. there was a great story by john authers looking at the economy, but what does this volatility tell us? >> it might point to the fact that the fed is unlikely to react harshly to just one data print. the data volatility especially when it comes to revisions has been notable. i've got a chart of the average hourly earnings revisions, in yellow is the initial release, in white is the revisions that came out later. i've highlighted the november print here. the high wage print was what led the fed to be hawkish in december, to revise the dots higher and there inflation forecast type -- forecast up. but in january, inflation was revised to downwards, we had an

opposite picture for december, it came in low, but in friday's data it was also revised higher. so it tells us the fed is unlikely to react harshly to one data print, which bodes the question, what is it going to be to have the fed revise the dots higher in the march meeting? maybe the fed sent -- set such a hawkish bar that they can keep the same tone until then. mary daly on friday repeated the same line that the december dots are still valid. but we hear tomorrow from john williams, and another influential member of the fed on wednesday. francine: valerie tytel, our market supporter. let's dive deeper into markets, we are joined by roger lee, head of equity strategy at investec. what is your take on how markets have to change on the back of

that unexpected lee strong jobs report? roger: it was unexpected, but the key is not where the terminal rate is. most analysts are expecting one or two races between now and peak rates. the key is where rates go in the second half, particularly january 2024 expectations, because the market has been absolutely certain there will be rate cuts in the second half. francine: what does u.s. data push back against this? roger: if there isn't recession, than those cuts won't be coming through, if you don't get those rate cuts in the second half, then some equity valuations may have to be revisited. francine: we are not there yet, but you can see very aggressive rate hikes because they can withhold it and then reversal quickly afterwards, or is that wishful thinking? >> that was the wishful thinking

as it appears from these jobs reports friday. it tells you where the market stands. the psychology, market still very much looking for the slightest hint of good news when it comes to the trajectory of the fed rate. really those expectations for rate cuts later this year have become solidified, which is good news for markets in away, but now we're in a situation where good economic is turning out to be bad news for markets because it means the fed's message of higher rates for longer becomes a lot more entrenched. francine: but you could see a scenario where you really fight nation -- fight inflation with everything and you are still left with an economy that is okay. >> the soft landing narrative has been revived by friday's numbers. the idea that the inflation figure has been coming down, the fed has succeeded in bringing

that lower, maybe not to target but they have cut it in about half an's the peak -- since the peak last summer. the question is, does the fed need to do more to break the economy, particularly the labor market which is quite robust to finally get that inflation figure back to target. that is the hard part for the fed, bringing down the current six level to the current 2% target. francine: we have repricing fed expectations, and that china-u.s. story. roger: the risk to markets, which may sound perverse, but the risk to markets is a soft landing. the risk is a higher for longer interest-rate environment. if we do have rates higher for longer, it suggests the economy is reasonably robust, that we are heading towards this soft

landing. in those circumstances, play sectors that are cyclically exposed, we like financials and oil stocks. francine: the markets prefer soft landing too long, protracted recession? roger: yes and no. this is one of the great paradoxes, to get that interest-rate cut in the second half, you really need a slowing economy. and if the economy doesn't slow, rates stay higher for longer, and that will put pressure, certainly in the u.s., on some of the more highly valued parts of the market. so what you see in the u.s. is potentially another rotation as you saw in the last quarter out of tech into value stocks. francine: have we reached what to do with the u.k. market? i don't know whether we have reached peak inflation, we spoke with the bank of england governor thursday and it seems to be tricky. roger: it is one of those interesting contrasts across

global equity markets. because of the contrust of the u.k. equity market, particularly the ftse, this recession narrative is good news for the ftse because of its exposure to financials, materials, etc. you could see a similar set of circumstances to the first quarter of last year where the ftse outperforms and the s&p perhaps underperformed. a softer landing, recession receiving is definitely good news for the u.k. market. francine: you are right about the u.k. every day, what do people here, retail traders and investors need to look at when about the u.k.? >> it is still a very challenging environment for u.k. assets, even the record close for the ftse 100 immediately brought doubts about whether it will last, or if this is the best the ftse 100 and do. -- can do. similarly for the pound, we have seen recovery in january from

the low levels that hit around september time, but there is still a lot of doubt that u.k. markets in general can sustain the little momentum we saw. but roger is right, if we see less of a recessionary environment and more of a softer landing, that will do a lot to improve sentiment in these assets because it is such a low bar at the moment. francine: thanks for joining us, kristine aquino, and roger lee from investec stays with us. let's get to the first word news. >> hundreds have been killed in a north right that ripped across -- in an earthquake that ripped across the board or between turkey and syria. it was centered in the turkish city of gaziantep airport. hundreds of people are trapped. the yen fell on a report that the doj deputy governor -- boj

deputy governor has been approached to become the next chief. a government coalition held discussions with amamiya on succeeding governor kuroda, whose term ends in april. the g7 and eu's $100 a barrel price cap on russian diesel has taken effect. the g7 statements says that cap applies to petroleum products trading at a premium to crude. they back a limit of $45 for those that salad a discount such as fuel oil and some types of naphtha. they will delay reviewing a 60 glory cap on russian crude until march. global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. francine: now coming up, u.s.-china tensions balloon as washington shoots down the alleged chinese spy balloon off

the south carolina coast. we have the latest next. this is bloomberg. ♪

francine: welcome back to the open. 13 minutes into the european trading day. seeing pressure across the board. stocks are retreating, on an unexpectedly strong u.s. jobs number friday raising the prospect of more rate hikes from the federal reserve, so markets are readjusting. washington has launched a mission to salvage a surveillance balloon from china after shooting get down off the south carolina coast over the weekend. beijing has warned the u.s. to not escalate tuition -- the situation.

>> any country that has its airspace violated would respond similarly. i can only imagine what the reaction would be in china if they were on the other end. francine: for more, we're joined by our senior asia editor, bill, this is not the first time we have had skirmishes, there was a fighter jet remiss in -- near miss in 2022, how does this compare to other standoffs between the u.s. and china? >> it has gotten, in some ways, more attention than what security experts would say are more serious national security threats from chinese surveillance. it came at a very critical time just before secretary blinken was due to travel to china, and before president biden gives his state of the union address to congress on tuesday. quite a sensitive time, particularly for the u.s.

administration, and it will continue as these divers go up to salvage this balloon and the pieces, and report on what they find. francine: what does it mean for possible retaliation? is it rhetoric, or could we see a worsening situation between the two countries? >> the first thing we'll be looking for is whether secretary antony blinken reschedules his trip to beijing. and what kind of message she plans to carry with him. there is a lot of talk that he will have to show up with a slightly tougher message. there is talk on the chinese side that they want to find a way to retaliate. we have no idea what form that could come, but the u.s. navy continues to operate throughout much of the waters in this region, including contested areas, will the chinese push back more on that? there is the possibility the u.s. could put additional

technology sanctions on beijing, depending on when the pieces of the balloon are brought to the surface. francine: thanks so much, bill joining us on the latest between the u.s. and china. we are back with roger lee, head of u.k. equity strategy at investec. when you look at the u.s.-china tensions, how do they translate into your world? are there stocks in the u.k. market that are more or less attractive because of this? roger: the u.k. has a lot of exposure to china and asia within the ftse, and our exposure to mining as well. in this particular context to though, does this increased tensions, or is it just a fact that we have to live with this tension between the u.s., the west and china, what that leads to from a longer-term

perspective for markets is this idea that globalization is in retreat. the idea that we have ongoing tension between china and the u.s. suggests yet again that globalization has reached a peak, and that has profound applications in terms of inflation and costs, etc. francine: we are getting breaking news out of adani, adani transmission, they have 10 companies, this is adani transmission, they will repay $1.1 billion of a share-backed facility. we're hearing a lot of the bank saying we're going to use some of the adani stock as collateral, does this have global implications into u.k. markets? roger: it always has implications when we have this sort of financial distress with such a major corporation. the market has been dealing with this tension for a while.

the third week. but whether this is unexpected for the market is probably more limited. but there clearly will be exposure to the banks, there always is in these situations, but whether it is particularly concentrated i'm not sure is totally clear, but the market has to live with corporate distress all the time. francine: are you surprised we have not seen more distress, not necessarily because of adani, but the leverage has gone from zero point 5% to 5% interest rates from the back of englund and we haven't seen any huge bankruptcies. roger: the answer from a public market perspective is actually companies went into this particular cycle with relatively low levels of debt. going back into the early 90's, there was a huge amount of

corporate debt and loans out there, we are in a very different place now, i think chastened by the financial crisis. the public markets it is a pleasant surprise but the market is less indebted. i think for the private sector is perhaps where is more going to land. francine: when does it land? roger: when it needs to be refinanced is when it lands. for the time being, there is a limited runoff in terms of the financing that was put in place in the very low interest-rate environment, you would expect that you start to run off over the course of this year. this is war concentrated in the private sector in this cycle rather than public markets. francine: thanks so much, roger lee, head of u.k. equity strategy at investec. we get the latest from the powerful earth quake that has killed hundreds on the turkey and syria border. this is bloomberg. ♪

francine: welcome back to the open. we are 22 minutes into the european trading day. the picture is losses across the board, we had an unexpectedly strong u.s. jobs report raising the prospect of more rate hikes from the federal reserve, and

china and u.s. geopolitical concerns weighing on sentiment. european stocks down .6%. hundreds have been killed in an earthquake that hit the border between turkey and syria, damaging highways, an airport and the local natural gas network. rescue efforts are ongoing. simin, what's the latest on the quake rescue? >> the quake hit at 7.7 magnitude at 4:00 a.m. in the morning local time, now we are six hours into the rescue effort. this earthquake was so huge it was felt in countries such as egypt, lebanon and israel. we're hearing that reportedly there are almost 300 people dead in turkey. and more than 200 people dead in syria. with thousands injured.

turkish authorities are saying more than 1700 holdings have collapsed -- buildings have collapsed across several cities. we have also just heard that turkey has halted crude flows to a key export place in the mediterranean as a cautionary measure. no leaks have been detected though. francine: who has offered international help so far? >> we have heard from the west saying they can assist with rescue efforts, as well as in drill -- as well as israel, india and azerbaijan. straight after the earthquake, the turkey interior minister said turkey is that a 4 level

alert, which includes international aid. it's a race against time. wintry conditions in the region, currently rain with two degrees celsius, but snow is expected. and of course, there is thousands that needs to be rescued. . francine: how prone is the area to dealing with earth quakes? >> turkey is extremely proud to earthquakes, it is on one of the most active seismic zones, and this could be one of the biggest earthquakes in decades. in 2011, a 7.1 magnitude earthquake hit an eastern city with 600 deaths and thousands injured. there was the huge earthquake in 1999 in northwestern turkey which killed 18,000 people. so unfortunately, turkey has a lot of experience dealing with

these tragic events. francine: thank you so much for joining us, simin demokan in turkey. the adani stock around enters it third week with the and dollar bonds falling. we will have more on that story shortly. and we heard that adani transmission will repay $1.1 billion of the share-back facility. futures in the u.s. are down, as our european stocks, after the strong jobs report. this is bloomberg. ♪

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francine: welcome back to the open. 30 minutes into the european trading day.

friday's mega jobs report sparks worries of ongoing fed rate hikes, while the u.s. saw a gain of more than 500,000. the u.s. looks to retrieve what it believes to be spy equipment from a downed chinese balloon, while beijing says it reserves the right to respond as tensions flare. a powerful earthquake in southern turkey kills hundreds. it was felt as far away as israel, lebanon and egypt. we will have a full round up with reporters on the ground. the picture overall on the markets is not only on geopolitics with the u.s. and china, but also what happened friday after the blowout report, the u.s. jobs report now raising prospects of more rate hikes. and there is concern over the u.s.-china sentiment because of the downing of that balloon, we will find out more in the coming

days. in terms of currencies, there is something with yen, rumors point to a successor for governor kuroda. sectors on the move, there is some interesting stories, technology, real estate and retail under pressure, down 1.5%, telecom only one slightly in the green, as we were saying, the nikkei reported the boj deputy governor amamiya has been approached to become the next central bank chief. the government has repeated the report. joining us to discuss is gearoid

in tokyo, what could this mean for the boj's ultra easy policy? >> the government has denied the decision, but certainly amamiya has been the leading contender for some time. if it turns out to be true, more in terms of what it doesn't mean is a major change in boj policy the next couple of months becomes quite unlikely. there has been a lot of speculation over the past months that boj is due for a major shift, but amamiya being the deputy to governor kuroda would be something of a candidate who would keep policy somewhat loose, rather than the outright pivot some people seem to be expecting. francine: do we have a sense of

who else could be in the running to lead the boj? >> most of the speculation has centered on amamiya, as well as the former deputy governor. he would be a more hawkish choice than amamiya would be. there are other names in the mix. another name that surfaced was yamaguchi, the deputy governor to kuroda's predecessor. he would represent, or certainly would suggest, that prime minister kishida is looking for a larger change in policy rather than a continuation of the decade of kuroda economics we have had. francine: what are you hearing from analysts? a number of banks have put out interesting notes. >> certainly, the reports today,

i think people are reluctant to commit to much given the wording that amamiya was being sounded out, the wording is weak given we expect the nomination to happen in a couple weeks, but people are saying this choice would reduce the likelihood of a major shift in the couple of months from the boj, but that would be positive probably except for stocks that are financial in japan, and suggests weaker yen in the near term in the absence of a major pivot from the bank. francine: thanks for the terrific update, now indian policy regulators are stepping in to calm investor nerves after the adani group enters its third week under the cloud of the adani crisis. for more, let's bring in our

reporter in mumbai, p.r. sanjai, how bad is the week going to become how is the government responded so far to the adani crisis? >> all of the indian ministries, including the finance minister, will step into this crisis to cool off investor sentiment. we saw that the central bank of india is stepping in to say that things with the banks are ok. and the banks have come up with the statement are saying that their exposure is within limits. now the latest we are seeing is the adani group founders, the family is pledging shares. meanwhile, the opposition party has demonstrated some protests in front of the gandhi statue in the capital.

so things are gathering pace, we don't know whether they will take to the street with this adani protest. francine: we will keep a very close eye on everything going on with adani. the other big story is the renault-nissan story. our anchor tom mackenzie is on the ground. this has been quite a lot of time in the making. it is interesting to note that the landmark deal to reshape the alliance has been happening in london. they signed a deal this morning aimed at using long-standing tensions between the two companies, and we hope it is allowing them to move forward at a time of unparalleled challenges for the automotive industry. it includes joint development of

several new models, and as part of the pack, renault will cut its holding in nissan to 15% from 43% to rebalance the lopsided capital ties. tom will speak to both chief executives in an exclusive joint interview at 10:15 a.m. london time today. we will have more on the alliance, and more on some of the challenges, including several industrial projects for carmakers. this is bloomberg. ♪

francine: welcome back to the open. 40 minutes of the european trading day. a lot of pressure on stocks because of better-than-expected u.s. jobs report on friday. what does that mean for hikes? and tensions between the u.s. and china. renault directors have agreed to a deal to rebalance the two-decade old alliance with nissan, to ease long-standing tensions between the two companies. joining us is bloomberg's car czar, it is refreshing not talking about elon musk and tesla, what is the latest on

renault and nissan? >> today a confirmation of something we have known for some weeks, that renault will take a big chunk of their ownership in nissan and put it in a french trust so that companies have an equal holding arrangement, where they each hold 50% of one another. it will take perhaps years for renault to go about selling its nissan stake, a lot to be worked out in terms of what the particulars will be, how much of a hurry renault is. we can presume they will want to take their time because nissan's valuation is depressed at the moment, and nissan does not want this many shares on the market. they are likely to want to purchase a good chunk of this themselves. francine: these automakers have a million things to deal with, ev's, batteries, is this like

france versus japan? for does this put them on a better footing to take on the market? >> that is coming into play. and this is such a long time coming. i year ago, the renault ceo talked about breaking up his company and setting up a dedicated electric vehicle and software entity separate to a combustion and hybrid engine entity. there is a lot of complexity to go about realizing that plan. it's been very challenging to do that because of the french state's involvement, because nissan has concerns about intellectual property and sharing ip with new partners. this is been very complex. this is just the beginning of formalizing that in the sense that they are going to further this agreement hopefully by the first quarter. and then have something more definitive by the end of this

year, so we will be at this a while. francine: in five or 10 years how does the carmaker landscape look, will they be up a player still? >> there are a lot of questions about whether the alliance or a venture approach makes sense for the long-term. we're seeing more of it as opposed to less in the industry because of the high cost of bringing new models to market, making the big switch of powertrain from combustion engines that the industry knows quite well to batteries and software, something they don't have as much expertise in. but long-term, do we see companies move away from this in order to be more agile? so it doesn't take them years to formalize something they have decided they want to do. francine: question for the executives, are you finally going to get along? >> and is this the beginning of the end of your marriage, as opposed to a new chapter, to

make everybody happy and put tibet all the grievances that have built up over the years. francine: don't miss that exclusive interview tom mackenzie will bring us later on. let's get to the first word news with laura wright. >> hundreds of people have been killed in an earthquake that ripped across the border between turkey and syria. it measures 7.7, one of the most powerful in years, it was centered near the turkish city of does young -- of gaziantep. the yen fell on a report that amamiya has been approached to become the bank's next chief. discussions were held with amamiya on succeeding governor kuroda whose term ends in april. but the government has repeated the report. dell has announced massive job cuts, it will lend low mandate

-- it will eliminate 6600 jobs, 5% of its global workforce. it is facing plummeting demand for personal computers. the g7 and e.u. $100 a barrel price cap on russian diesel has taken effect. a g7 statement says it trades at a premium to crude. they will also delay reviewing a $60 cap on russian crude until march. global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. francine: now let's look at stocks on the move with joe easton from our equities team. looking very sharp for a monday morning. >> thanks, fran, bit of a wedding vibe.

idorsia is a slumping 15%, announcing disappointing drug data for one of their hemorrhage products. it was really disappointing given the product is on the market in some countries, including japan. another stock falling today is hargreaves lansdown, britons will have less savings this much behind of -- this month because of the cost of living crisis. that one down around 2.4%. finally, the cheapest pun i will make all the way, angry birds are flying over helsinki, rovio is considering a takeover bid from an israeli firm that values the company at $810 million.

that stockstill down 15% since it went public in 2015, so the shareholders are almost as angry as the birds on that one. francine: very good, joe. my kids reminded me angry birds are not only back in fashion, but also pokemon. joe easton with the stocks to watch. we have breaking news out of renault and nissan. craig trudell had a terrific briefing on what this means going forward, they signed a deal aimed at easing long-standing tensions between the companies. this should allow them to move forward at a time of unparalleled challenges for the automotive industry. interesting to see that presentation in london may be on neutral ground, and tom mackenzie will speak to the chief executives of both in an

exclusive interview. don't miss it. it is at 10:15 a.m. london time. this is bloomberg. ♪

>> if we see a moderate rebound of chinese economy, we expect this year about half of the

growth in global oil demand will come from china only. this is moderate, but some financial institutions say the chinese rebound will be much stronger than expected, this will put higher upward pressure on the demand side. francine: the iea executive director speaking to bloomberg on the demand for oil and natural gas. we need to correct breaking news earlier, adani founders will repay this $1.1 billion share backed facility, we had earlier reported it was adani transmission, actually it is adani founders. it doesn't change anything in terms of the big narrative, which is we are in the third week of the adani story, and expecting more news. shares in the

newcrest strengthened after australia's largest miner offered to buy it. this is a huge deal. $17 billion, what does it mean for the sector? >> the idea is that it has been driven by this decrease in limited reserves in the gold mining industry. for the gold companies wanting to keep production going, one of the options is deals, the other thing is costs. we have seen cost pressure across the industry, so the economies of scale for a company like newmont, it makes sense to go after a big target like newcrest. francine: a couple years ago there was a big consolidation phase. if you look worldwide, gold and copperhead already consolidated, so what is left? >> newcrest for one thing.

newmont in the last round was one of the big players, they took a stab at the other big giant and bought gold corp. to become the biggest producer. now the big question is what the other company does, he has been a vociferous opponent of high premiums, so it will be interesting if he feels pressure to do something else or step in and make a bid for newcrest. francine: could we enter a bidding war because there are so few assets left? >> newcrest is already offering a premium of 20% and a share proposal, so if anyone wanted to come out on top of that, there is certainly potential for things to go higher. francine: we have the china

reopening, i don't know how much demand that will lead to four gold, but what stories are you working on? >> the big fame in gold has been potentially china related and that there has been a lot of central-bank purchasing, china has increased its reserves and that has supported the gold price the last six months or so. newcrest is also a reasonably sizable copper producer, and they are seeing electrification drive demand, and china's reopening will drive manufacturing as well. francine: other parts of the world are looking for rare-earth, what commodity will run out quicker, i don't know whether it is copper, or lithium that is needed for the energy transition? >> copper gets a lot of

attention because it does go into evs and is needed for batteries and cars, but more broadly for the electrification theme whether it is grids, for that sort of thing, there is a lot of narrative that may be in the five to 10 years period, the world is looking at some sort of shortage of copper. francine: we are getting breaking news out of renault and nissan. this is a historic alliance aimed at easing long-standing tensions between the two companies. this allows them to move forward at a time of unparalleled challenges for the automotive industry. nissan intends to invest in renault's electric vehicle business, as much as a 15% stake, our tom mackenzie will be

speaking to the chief executives of both renault and nissan in a joint, exclusive interview at 10:15 a.m. london time. also, what we look at is some of the equity futures in the u.s., but also european stocks declining on an unexpectedly strong u.s. jobs report, raising the prospect of more rate hikes from the federal reserve and there is concern over u.s.-china geopolitical tensions weighing on sentiment, and we look at yen. that's it for the european market open, "surveillance: early edition" is up next. this is bloomberg. ♪

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francine: